What You Don’t Know Can Hurt You


By Jessica L. Estes

Inherent in the institution of marriage is the idea that from that day on, each spouse shares in both the joys and hardships of the other. And, for most, it means that either spouse can act for the benefit of the other simply because they are married. 

Unfortunately, this is not necessarily the case. If you have separate bank accounts, investments, individual retirement accounts, etc. and one of you becomes incompetent, the other does not have the right to access the money unless there is a power of attorney in place authorizing it. So, if your spouse’s income is being deposited into their separate account and he/she becomes incompetent, you will not be able to use that money to pay bills or for any other purposes. Only a power of attorney or legal guardian would be authorized to access those funds. Thus, it is imperative that both spouses have financial powers of attorney in place in the event either becomes incompetent. If not, the only alternative is for the competent spouse to seek guardianship of the other and that can be costly.

Similarly, if you are married and you die without a will, your spouse does not automatically get everything. Instead, it depends on several factors. First, if you have any joint accounts, those accounts will pass automatically to the joint account holder. Second, if you have a named beneficiary on any account or asset, that account or asset will pass automatically to the designated beneficiary. This could include retirement accounts, life insurance, annuities, bank accounts, investments, stocks, bonds, etc. that specifically list a beneficiary, or that is designated as pay on death (“POD”) or transfer on death (“TOD”). Hopefully, you do not have any former spouses named as beneficiaries on retirement accounts or life insurance policies unless, of course, that is what you specifically intended. This happens more than you may realize. 

Next, your family situation has an impact. Do you have children? If so, and if you die without a will, your spouse may not get everything. Further, the amount he or she gets is dependent on whether you have minor children and whether your children are from a prior marriage. If you have minor children, your spouse will receive one-half of whatever passes through probate (non-joint or beneficiary designated assets). If you have adult children from a prior marriage, then your spouse will receive one-half of the estate plus $100,000. Is this what you intended?  

Conversely, another common misconception is that if you are married and have a will that names only your children, your children will get everything. Perhaps you are in a second (or third, fourth, etc.) marriage and you want to make sure your children inherit everything, so you write a will leaving everything to them. Unfortunately, Maryland law does not allow you to disinherit a spouse. Regardless of what your will says, your spouse will have the right to elect a statutory share. In fact, even if you leave your spouse a portion of your estate, he or she can always elect to take a statutory share. The amount of that elective share is dependent on whether you have surviving issue. If you have surviving issue (children, grandchildren, etc.), your spouse will receive a one-third share of your estate subject to election which may include assets that pass outside the probate estate, reduced by the value of all spousal benefits as defined under the law. If you do not have surviving issue, then your spouse will receive one-half of your estate subject to election which may include assets that pass outside the probate estate, reduced by the value of all spousal benefits as defined under the law. And, if you think putting your assets into a trust to avoid probate and thus, your spouse’s election of their statutory share, think again. Maryland courts have ruled that if you put your assets into a trust, it is subject to your spouse’s elective share.    

And finally, to set the record straight, there is no such thing as common law marriage in Maryland. Just because you and your significant other lived together for a time, that does not give you the same legal rights as a spouse would have upon the other’s death. In fact, couples living together and who have joint accounts, but are not married, could face significant tax consequences upon their partner’s death if they do not register their domestic partnership. Be smart and be prepared.

Jessica L. Estes is an elder law and estate planning attorney at ERA Law Group, LLC in Annapolis. She can be reached at (410) 919-1790 or via email at [email protected]. Provided by ERA Law Group.

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